Coliseum OKs Deal For Warriors / City, county must agree to back loans to rebuild arena

Peter Fimrite, Chronicle East Bay Bureau

Published 4:00 am, Thursday, February 22, 1996

Oakland Coliseum directors approved plans yesterday to gut the coliseum arena and rebuild a new sports complex inside the empty shell in a deal that will keep the Golden State Warriors in Oakland for at least 10 years.

The $128 million agreement ends months of intense negotiations with the basketball franchise and features major concessions by both sides, including an agreement by the city of Oakland and Alameda County to use public money to back loans that will pay for construction and other costs.

That deal, which has been plagued by slow ticket sales, apparently convinced local officials not to rely as much on the sale of costly personal seat licenses, which guarantee fans the right to buy season tickets. Raiders marketing officials are trying to sell a total of 45,000 licenses to keep a $100 million reconstruction of the stadium at a break-even point.

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The plan is for Oakland and Alameda County to issue $128.2 million in bonds for construction and then refinance 80 percent of the loan within 10 months through private lenders. That will leave about $24 million in public money at risk if something goes wrong.

The renovations include construction of 19,200 seats, up to 3,000 premium-priced club seats and between 60 and 72 luxury suites. The renovation will also include lounge areas, new video replay boards, improved concessions and rest rooms.

The Warriors are slated to play at the Cow Palace during the project, which is expected to begin in June and be completed by October 1997.

Oakland Deputy City Manager Ezra Rapport, who helped negotiate the deal, said the city and county expect to recover $19 million from the sale of seat licenses and $10 million a year from the Warriors in rental payments, ticket surcharges and luxury suite revenue. A portion of the revenue from parking, concessions, catering, advertising and other events will go toward paying off the public debt.

"We expect we are going to be able to privately finance the vast majority of the project," Rapport said. "There is an even greater risk to the public if we don't rebuild this arena and the Warriors leave -- the cost of maintaining the building would be far more than the revenue from the remaining activities."

Rapport said the city and county had to share some of the financial risk or the deal would never have worked. In exchange, the Warriors agreed to reduce the size of the arena, which was originally supposed to have 21,000 seats, and stay in Oakland even though they could have gotten a much better deal in San Jose.

WARRIOR'S DEAL AT A GLANCE:

-- Cost -- An estimated $128.6 million, including $90 million to rebuild and expand the existing Coliseum arena and a $15 million "retention fee" to reimburse the Warriors for arena development costs and for lost income during the construction of a new arena. -- Arena size -- A total of 19,200 seats, including 2,800 to 3,000 club seats; 60 to 72 suites. -- Construction -- Groundbreaking scheduled for July 1996; completion for November 1997. -- Lease terms -- Twenty years, plus four five-year options; escape clause allows team to leave the Coliseum after 10 years if it pays off the outstanding debt on the rebuilt arena. The team will pay the Coliseum $1.5 million a year in rent plus a $500,000 annual management fee. -- Source of funds -- Oakland and Alameda County bonds will provide short-term financing for all project costs. Within eight to 10 months, about 80 percent of the public funding would be refinanced by a private loan. Additional funding sources include a fee of not more than 5 percent on all new arena tickets; $11.9 million from deposits on courtside seats and luxury suites; $7.5 million from selling the rights to the arena name; and $7 million paid in advance by the arena's concession contractor. The financing sources are not enough to cover all project costs, so the city and county would carry 20 percent -- about $24 million -- as long-term debt. This debt would be paid off over 30 years through revenues from arena operations. -- Profits -- Net income will be split between the team and the Coliseum, until the arena reserve fund reaches $7 million; after that, 75 percent goes to the Warriors and 25 percent to the Coliseum.

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